Bridgewater Associates, the largest hedge fund in the world, had 303 positions at the end of the first quarter. Most of the fund is dominated by ETFs. The fund’s top five positions at the end of the first quarter were:
- the Vanguard FTSE Emerging Markets ETF (VWO): 19.17%
- the iShares MSCI Emerging Markets ETF (EEM): 18.82%
- the SPDR S&P 500 Trust ETF (SPY): 13.79%
- the iShares Core MSCI Emerging Markets ETF (IEMG): 13.01%
- iShares Core S&P 500 ETF (IVV): 3.83%
Betting on emerging markets
The top five positions account for 68.6% of the total portfolio value. Ray Dalio’s largest single position is in VWO, which tracks the FTSE Emerging Markets All Cap China A Inclusion Index. Bridgewater increased its position in VWO ~45% during the quarter. EEM and IEMG are the other significant emerging-market ETF positions in Bridgewater’s portfolio. Bridgewater boosted its position in EEM and IEMG 727% and 185%, respectively, during the quarter. Bridgewater is betting big on emerging markets.
Bet on Brazil
The iShares MSCI Brazil Capped ETF (EWZ) is Bridgewater’s seventh-largest position. EWZ contributed to 2.3% of Bridgewater’s total portfolio. The fund increased its position in EWZ 821% during the quarter. In March, strategists at Bridgewater told Reuters that they see Brazil’s growth potential as the strongest in the world in 2020. They said, “Given that pricing already discounts extreme weakness and (local political) mismanagement, we think there is considerable room for Brazil’s economy and assets to surprise on the upside.”
Bridgewater Associates beat the market and its peers in 2018 due to the way the fund is designed. Most of the market suffered huge losses in the last quarter of 2018 as equities fell. However, Bridgewater had a typical year due to its design. Bridgewater isn’t usually long on any particular asset, which allows the fund to have its alpha uncorrelated over time to equity markets. Only time will tell if Bridgewater will be able to repeat its performance in 2019. The fund’s investment thesis remains the same. To learn more, read Ray Dalio Beat the Market and Peers in 2018.